Magazine

Why the "Three Amigos" Still Have Friends

June 10, 2001

The "Three Amigos" did a wonderful job bringing Yahoo! Inc. to where it is today ("Inside Yahoo!" Cover Story, May 21). The concepts underlying its business are still very sound. What is needed is simply a relatively modest adjustment of overall strategy, a somewhat greater adjustment of tactics, and a very major adjustment of its business-development processes.

Yahoo should have sought strategic advice from an appropriate consulting firm at the very first signs of possible problems, rather than struggle through "13 blistering months" that culminated in a totally unnecessary and debilitating top management shake-up.

For all its knotty problems, Yahoo still remains in a far better position to regain and increase its value than many other competing companies that were affected by the deflation of the Internet phenomenon.

Irving I. Goldmacher

Stony Brook, N.Y.

I'm surprised to hear of Timothy A. Koogle's disengagement at Yahoo. When I signed up for Yahoo Bill Pay! a year ago, I had a problem with it and wrote an e-mail to Koogle. He immediately ordered up a solution, gave me an extra three months' free service, and personally sent a follow-up message after the issue was resolved.

Stephen Clifford

Beulah, Mich. "The FCC should crack down on the Bells" (Editorials, May 21) repeats familiar myths about telecommunications competition. Chief among these is the idea that we can regulate ourselves to a state of fair and open competition.

The Telecommunications Act of 1996 promised consumers more choices. SBC Communications Inc. and other phone companies opened their networks to new providers of local service. Today, 10 million lines in SBC's 13-state area are being served by competitors. The evidence that our markets are open was compelling enough that state and federal regulators have permitted SBC to begin offering long-distance service.

Many would-be competitors survived just long enough to be acquired by larger providers or merely fell victim to their own business plans. In any case, they quickly realized there was more profit in "cherry-picking" high-end business customers--thus the low percentage of residence customers cited by BusinessWeek as getting local service from non-Bell companies.

In citing "soaring" prices for broadband connections, BusinessWeek overlooks the fact that regulation is a major contributor to our cost of providing broadband service. Cable providers pursue their vision of wiring the nation for broadband unburdened by regulation.

We agree that "the rollout of broadband is a national goal of the highest order." All the more reason to allow market forces, rather than misguided and punitive regulation, to dictate the choices available to consumers. Legislation before Congress would speed that process immediately.

Edward E. Whitacre Jr.

Chairman and CEO

SBC Communications Inc.

San Antonio Contrary to the conclusion reached in "Ground wars" (Industries, May 21), FedEx is gaining ground on its main rival. Consider this: In 1980, FedEx' revenues were $415 million; today, they total more than $20 billion. Put another way, the company has grown from one-tenth the size of UPS in 1980 to more than two-thirds the size of UPS today. So who's really catching up to whom?

Even a cursory review of the numbers would have revealed that FedEx has consistently improved its lead in the express and ground transportation sectors over UPS in revenue, as the table of yearend market share shows.

FedEx has surpassed the UPS yield growth (revenue per package) in every category--overnight, deferred, ground, and international--in each of the past three comparable quarters.

FedEx has seized growth opportunities no competitor can match, including: the acquisition of American Freightways; the groundbreaking retail/transportation agreements with the U.S. Postal Service; a special home-delivery service for the e-tailing segment, and alliances in fast-growing international markets, such as La Poste in Europe.

Along the way, FedEx has built what is the most seamless global air and ground network in its industry, connecting more than 90% of the world's economic activity. The FedEx network, nearly impossible to replicate, lets the company provide a substantially higher quality of service than its competitors.

Next, can we at last put to rest the issue of the e-mail threat to FedEx overnight envelope market? Express delivery envelopes account for only 9.3% of the company's revenues. Of that, a large percentage is impervious to e-mail because many of these envelopes contain intellectual property or components that cannot be transmitted via the Internet--items such as medical devices, electronics, or personal gifts.

It is distressing that BusinessWeek has never given readers a fair opportunity to understand the strategy and performance of FedEx. They have only been exposed to your dismissal of it.

William G. Magaritis

Corporate Vice-President for

Worldwide Communications & Investor Relations

FedEx Corp.

Memphis

Editor's note: See Corrections & Clarifications. One has to assume that the Boeing Co. executives who selected Chicago--over Dallas and Denver--for their new headquarters decided that BusinessWeek's obituary for Chicago as a major business center was premature ("Chicago blues," Cover Story, Oct. 16, 2000). While the reporters said that Chicago was a great, livable city, it was "slipping as a business capital."

Boeing CEO Philip M. Condit said that the decision was based "on good, solid business reasons." Incentives were not a factor, he stated. Of course, in fairness to BusinessWeek, its dire prognostication last October was obviously made well before the Boeing decision. Or even before the decision by Ford Motor Co. for an automotive complex in Chicago. Moreover, it was some three months before Chicago's alleged "shrinking" financial markets were deluged with record-breaking transaction volumes, which catapulted the Chicago Mercantile Exchange to first place in American derivatives markets.

Leo Melamed

Chairman Emeritus and Senior Policy Advisor

Chicago Mercantile Exchange Inc.

Chicago

Editor's note: Chicago Mayor Richard M. Daley and Illinois Governor George H. Ryan promised at least $63 million in incentives to Boeing--far more than Denver and Dallas offered. The Ford complex will come at an additional cost to taxpayers of more than $100 million. While the Boeing move is a coup for Chicago, the head offices of at least nine other major companies have been lost to Chicago in the past seven months.